Global markets mixed, pausing ahead of Fed chief testimony

|    Yuri Kageyama    |

TOKYO (AP) – Global shares were mixed yesterday in cautious trading ahead of closely watched congressional testimony by Chairman of the United States (US) Federal Reserve Jerome Powell.

France’s CAC 40 inched up less than 0.1 per cent to 5,573.88 in early trading. Germany’s DAX lost less than 0.1 per cent to 12,431.43, while Britain’s FTSE 100 fell nearly 0.1 per cent to 7,529.10.

US shares were set to drift lower with Dow futures slipping 0.2 per cent to 26,738. S&P 500 futures dipped 0.1 per cent at 2,978.70.

Investors are awaiting two days of congressional testimony by Powell. Traders would be listening to the exchanges with lawmakers today for hints about the Fed’s next move on interest rates.

The market rallied through much of June after the central bank signalled it’s prepared to cut rates to offset slowing global growth and the fallout from US trade conflicts. But an unexpectedly strong US jobs report last Friday has dimmed investors’ expectations.

Many traders still expect the Fed will cut its benchmark rate by a quarter percentage point at the end of the month, but fewer are now expecting a half-point reduction.

Men walk past an electronic stock board showing Japan’s Nikkei 225 index at a securities firm. – AP

The question is whether the Fed will still see a good argument for cutting interest rates after the strong US June jobs data.

The Fed’s benchmark interest rate currently stands in a range of 2.25 per cent to 2.5 per cent and the central bank has not cut rates since the Great Recession in 2008. Last year, Fed officials raised rates four times, partly to stave off the risk of high inflation and partly to try to ensure that they would have room to cut rates if the economy stumbled.

“The picking up of tech stocks overnight on Wall Street presents a positive lead for Asia markets, though risks persist with the Fed testimony ahead,” said Jingyi Pan, market strategist for IG in Singapore.

“Fed Powell’s testimony will be scrutinised for both his views on the economic situation and guidance in terms of any upcoming moves.”

Japan’s benchmark Nikkei 225 edged down nearly 0.2 per cent to finish at 21,533.48. Australia’s S&P/ASX 200 added 0.4 per cent to 6,689.80. South Korea’s Kospi gained 0.3 per cent to 2,058.78. Hong Kong’s Hang Seng rose 0.3 per cent to 28,204.69, while the Shanghai Composite fell 0.4 per cent at 2,915.30.

ENERGY: Benchmark crude oil added USD1.17 to USD59.00 per barrel. It gained 17 cents to USD57.83 a barrel on Tuesday. Brent crude oil, the international standard, rose USD1.16 to USD65.32 a barrel.

CURRENCIES: The dollar rose to 108.89 Japanese yen from 108.86 yen. The euro rose to USD1.1228 from USD1.1208.